S&P 500; US Indexes Fundamental Daily Forecast – Modest Growth, Low Inflation Good for Stocks

U.S. stocks marched higher on Friday, picking up where it left off at the end of August. Investors seemed to like the “disappointing” U.S. Non-Farm Payrolls report because it raised questions about the Fed’s ability to raise interest rates. Lower interest rates tend to drive investors into stocks.

In the cash market, the Dow Jones Industrial Average was trading at 22023.59, up 75.49 or +0.34%, the benchmark S&P 500 Index was at 2479.48, up 7.83 or +0.32% and the tech-based NASDAQ Composite was trading at 6435.71, up 7.05 or +0.11%.

In the Dow, Goldman Sachs contributed the most to the gains. It also helped the S&P 500 Financial Sector post solid gains for the day.

This week’s economic data showed a disconnect between modest economic growth and low inflation. These are favorable conditions for stock market growth.

On Wednesday, the GDP beat expectations. On Thursday, the PCE came in below expectations. Today’s U.S. Non-Farm Payrolls report showed the economy added 156,000 jobs in August, according to the Bureau of Labor Statistics. This may have been a disappointment to economists who were looking for 180,000 jobs to be added to the economy, however, stock traders liked the news because it suggested interest rates would remain low for a while.

In my opinion, solid U.S. and global economic growth, strong earnings, low inflation and still-amble global liquidity are liquidity to continue to support higher stock prices. This market has also shown the ability to shrug off geopolitical events in North Korea and political turmoil in Washington.

Stocks could get additional support from Trump’s tax reform plan since it looks as if Republicans and Democrats may have found common ground.